Managerial Accounting, 2026 Release Test Bank - Ray H. Garrison

Test Bank | Managerial Accounting, 2026 Release by Ray H. Garrison, Noreen, Brewer, Montague
2026 COMPLETE TEST BANK
Verified Answer Keys
Exam-Ready Practice
Chap 01 2026 Release - Garrison
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Which of the following statements are true?
1. A factory supervisor's salary would be classified as an indirect cost with respect to a
unit of product.
2. A direct cost is a cost that can be easily traced to the particular cost object under
consideration.
3. A cost can be direct or indirect. The classification can change if the cost object
changes.
1) ______
A) Only statement Ione is true.
B) Statements Ione and II are true.
C) All of the statements are true.
D) None of the statements are true.



2) Which of the following statements are true?
1. Wages paid to production supervisors would be classified as manufacturing overhead.
2. Indirect costs, such as manufacturing overhead, are variable costs.
3. Selling costs are indirect costs.
4. Administrative costs are indirect costs.
2) ______
A) Only statement Ione is true.
B) Statements Ione and III are true.
C) All statements are true.
D) None of the statements are true.




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,3) Which of the following statements are true?
1. The sum of all manufacturing costs except for direct materials and direct labor is
called manufacturing overhead.
2. The three cost elements ordinarily included in product costs are direct materials,
direct labor, and manufacturing overhead.
3) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.


4) Which of the following statements are true?
1. Depreciation is always considered a period cost for external financial reporting
purposes in a manufacturing company.
2. Depreciation on equipment a company uses in its selling and administrative activities
would be classified as a period cost.
4) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.


5) Which of the following statements are true?
1. Conversion cost is the sum of direct labor cost and manufacturing overhead cost.
2. Conversion cost is the same thing as manufacturing overhead.
3. Conversion cost equals product cost less direct materials cost.
5) ______
A) Only statement Ione is true.
B) Statements Ione and III are true.
C) All statements are true.
D) None of the statements are true.




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,6) Which of the following statements are true?
1. In a manufacturing company, all costs are period costs.
2. Selling and administrative expenses are period costs under generally accepted
accounting principles.
3. The cost of shipping parts from a supplier is considered a period cost.
6) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Statements Ione and II are true.
D) Statements Ione and III are true.


7) Which of the following statements are true?
1. Advertising is not a considered a product cost even if it promotes a specific product.
2. Product costs are also known as inventoriable costs.
3. Prime cost is the sum of direct materials cost and direct labor cost.
4. Prime cost equals manufacturing overhead cost.
7) ______
A) Only statement Ione is true.
B) Both statementsIone andIVfour are true.
C) Statements Ione, II, and III are true.
D) None of the statements are true.



8) Which of the following statements are true?
1. If the activity level increases, then one would expect the fixed cost per unit to
increase as well.
2. A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.
3. A decrease in production will ordinarily result in a decrease in fixed production costs
per unit.
8) ______
A) Only statement II is true.
B) Only statement III is true.
C) Statements Ione and II are true.
D) Statements Ione and III are true.




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, 9) Which of the following statements are true?
1. Cost behavior is considered curvilinear whenever a straight line is a reasonable
approximation for the relation between cost and activity.
2. As activity decreases within the relevant range, fixed costs remain constant on a per
unit basis.
3. In account analysis, an account is classified as either variable or fixed based on an
analyst’s prior knowledge of how the cost in the account behaves.
9) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Only statement III is true.
D) All statements are true.


10) Which of the following statements are true?
1. The variable cost per unit depends on how many units are produced.
2. A step-variable cost is a cost that is obtained in large chunks and that increases or
decreases only in response to fairly wide changes in activity.
10) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.


11) Which of the following statements are true?
1. A fixed cost is constant if expressed on a per unit basis but the total dollar amount
changes as the number of units increases or decreases.
2. Fixed costs expressed on a per unit basis do not change with changes in activity.
3. Committed fixed costs remain largely unchanged in the short run.
11) ______
A) Only statement Ione is true.
B) Only statement II is true.
C) Only statement III is true.
D) All statements are true.




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